RBA Board Split: Back-to-Back Rate Hikes Confirmed

The Reserve Bank of Australia delivered a second consecutive rate increase for 2026, hiking the official cash rate today by a further 0.25%.

Many borrowers had hoped that February’s rate hike would be a single adjustment for the year. Instead, the RBA has opted for another increase, citing persistent inflation and ongoing global economic pressures. 

Here is a quick snapshot of what today’s decision means for you:

• Repayments are jumping again: Lenders may choose to pass on some or all of the 0.25% increase onto your variable rate within days.
• Living standards are likely to be impacted: The combination of higher mortgage rates and expensive petrol will be impacting household income.
• The economy is flashing warning signs: Experts warn this hike could push us toward a noticeably weaker economy and higher unemployment later this year.
• Property prices are showing varied markets: We could see values in Sydney and Melbourne continue to actively decline, while smaller, supply-starved capitals ride out the storm.

Let’s look at exactly why the RBA made this call, what our experts think about it, and how you can protect your back pocket.

RBA Board Split

Five members of the RBA board voted to increase the cash rate to 4.10%. Four members decided to leave the cash rate unchanged at 3.85%.

The Board’s statement noted that inflation has picked up “materially in the second half of 2025” and that the “conflict in the Middle East has resulted in sharply higher fuel prices, which, if sustained, will add to inflation.”

“Short-term measures of inflation expectations have already risen. As a result, the Board judged that there is a material risk that inflation will remain above target for longer than previously anticipated.”

“A longer or more severe conflict could put further upward pressure on global energy prices; this will push up near-term inflation and could also increase inflation further out if it impairs supply capacity or price rises get built into longer term inflation expectations. Higher prices and prolonged uncertainty may cause growth to be lower in Australia’s major trading partners and also in Australia.”

The Hip Pocket Hit: Doing the Math

When the RBA moves the Official Cash Rate, the big banks & lenders usually follow in lockstep. To give you an idea of the impact, a 0.25% increase might sound small on paper, but it adds up over the course of 12 months, and even more over a 25-year loan term.

If you have a $600,000 mortgage with 25 years left on the loan, this latest rate hike will add about $91 to your monthly repayments.

When combined with February’s increase, that’s a total of $181 more you’ll be paying each month compared to the start of the year. Here’s what the impact of today’s 0.25% hike on monthly repayments looks like:

Amount Owed	Repayment increase in March	Repayment increase after both Feb & March rate hikes
$600,000	+$91	+$181
$800,000	+$121	+$241
$1 million	+$151	+$301

When you stack these repayment increases on top of the rising cost of groceries, electricity, and fuel, it is a significant squeeze on a household budget that may already be stretched.

Why Push Rates Higher Right Now?

his decision reflects the RBA’s ongoing focus on managing inflation. But the reality on the ground is far more complicated than the numbers suggest.

A major driver of recent inflation isn’t necessarily Australians spending recklessly at the shops. The big factor in recent weeks has been the global ‘oil shock’. Geopolitical tensions in the Middle East have pushed crude oil prices well above $100 a barrel. You feel that every time you fill up your car. Because it costs more to transport goods, the price of goods on the supermarket shelf goes up as well.

In response to inflation, the RBA increases the interest rates.

However, in our latest Property Insights Economic Update, leading economist Stephen Koukoulas (Kouky) pointed out the danger of this aggressive approach. He noted that hiking rates based on temporary, global inflationary pressures like oil prices is a massive risk. When you are paying a premium for essentials like petrol, power, and groceries, your household disposable income essentially “vanishes”. 

Mark Bouris agreed: “All goods and services are inadvertently affected by the cost of the price of oil, because it’s involved in everything.” 

“Oil is involved in everything we eat, in production, in farming, getting stuff to the market, delivery trucks, if you order stuff online, whatever it is, it’s all related to petrol prices.”

“If the price of all goods and services goes up, that means the cost of living will increase.”

“And that’s without any adjustment to interest rates, because when we measure the cost of living in this country, we don’t include interest rates. We include rents, but we don’t include interest rates.” 

“It’s quite possible that the cost of goods and services are going to continue to rise because all of the input costs go up and the vendor is going to charge (the consumer) more.” 

“So in other words, we’ve got less money on the table because we will be spending more to buy everything. And then the Reserve Bank puts the interest rates up to stop inflation, so that actually increases our cost of living even more.” 

Add another 0.25% to your mortgage repayment, and your disposable income decreases further. Mark describes this bluntly as a reduction in our standard of living. 

What does a rate hike do to the property market?

If interest rates keep climbing, what happens to the value of your biggest asset? According to the latest property data, we are no longer looking at one single Australian property market. We have a somewhat fractured market.

The Toll on Sydney and Melbourne

In Sydney and Melbourne, the sheer cost of buying a home has started to “soften” according to Koukoulas, particularly when compared to the rest of Australia’s capital cities.

Tim Lawless, Cotality’s research director, said: “The clear slowdown in housing conditions across Sydney and Melbourne could signal an easing in growth conditions elsewhere down the track, but for now, the mid-sized capitals continue to see support from extremely low inventory levels, which is boosting the growth in values.”

“Vendors are looking more motivated in Sydney and Melbourne, possibly looking to beat a further softening in selling conditions as clearance rates ease and demand slows,” Mr Lawless said. “If the typical seasonal pattern holds, the flow of new listings is likely to strengthen leading into Easter.”

The Supply Squeeze in Smaller Capitals

On the flip side, capital cities like Perth, Brisbane, and Adelaide are experiencing growth, with Perth seeing substantial growth in housing values. 

A lack of housing supply and strong interstate migration means buyers are still fighting tooth and nail over a small pool of available properties. The lack of supply is supporting property prices in these cities, largely ignoring the RBA’s rate hikes.

The Misconception of “Riding it Out”

Many people feel, “It’s too hard to refinance, I’ll just wait until rates drop again.”

While this may seem sensible, delaying a mortgage review could increase your borrowing costs, depending on individual circumstances

If you’re on a variable rate that starts with a 6 or a 7, you might be paying more than you need to. Even in a rising rate environment, lenders are fiercely competitive. Some lenders may offer promotional rates to new customers, while existing borrowers may benefit from reviewing their current rate and options.

Absorbing this 0.25% hike without exploring your options could mean paying more per year in repayments.

What You Can Do Today

Here are three simple steps to take if today’s decision has got you thinking about your current situation:

1. Check your current interest rate. Open your banking app and see exactly what you are being charged before this new hike even hits.
2. Review your household budget. Factor in the reality of higher fuel costs and this new mortgage increase. Find out exactly where your money is going.
3. Get an expert in your corner.

Our local mortgage brokers understand the specific pressures borrowers are facing. YBR brokers have access to dozens of lenders, and can provide information on fair market offering. We can look at your specific loan structure and figure out if refinancing or simply negotiating a sharper rate with your current bank is the smartest move.

You deserve guidance from a local expert you can trust. If you want to know exactly how today’s 0.25% hike impacts your specific situation, reach out to your local Yellow Brick Road mortgage broker.

We’ll get you sorted.